European defence companies asked to merge

Dec 8, 1997

In an effort to compete against
US defence companies,
the UK,
French and German governments
have called on European defence companies to merge into
a single company.

In the last year,
a number of American defence companies have
merged into "mega" defence companies. The British,
French and German
governments have become increasingly concerned at the lack of
rationalization in the European defence market as too many companies
compete for too few orders.

Hence their trilateral statement calling for a restructuring of Europe's
aerospace and defence sector. The governments have called on three
companies in particular,
British Aerospace (BAe),
Aerospatiale and
Daimler-Benz Aerospace to come up with proposals to integrate their
civilian and defence operations before March 31,
1998.

Sighart Nehring,
a official in Chancellor Helmut Kohl's office told
reporters in a press conference today,
"It would be desirable to have one
company".

The statement calls for "Europe to improve its commercial position in
the world and reinforce its security and guarantee that it plays fully
its role in its own defence."

A statement from British Aerospace welcomes the plan but remains coy
on whether the company is talking to its competitors. Chief Executive,
Sir Richard Evans,
said "We welcome the Trilateral statement which
confirms and reinforces the urgent need for a restructuring of Europe's
Aerospace and Defence Sector and the commitment of our own Government
to this issue."

However,
the British Manufacturers Association whose members
include British Aerospace and GEC,
said France must first commit
to privatizing its aerospace industry before
any proposals can go forward.

British Aerospace's managing director,
John Weston,
has called in
the past for such a pan-european merger,
but has publicly stated
that the French government's stake in Aerospatiale and Dassault
would be an obstacle to such a scheme.